Coca Cola and McDonalds - A deep, lucrative partnership

If I can ask a trick question: What are the top 4 ‘countries’ for Coca Cola by sales? The answer would be United States, Japan, Germany and… McDonald’s!

McDonald’s has a unique and deep partnership with Coca Cola since 1955 when McDonald’s was in its infancy and Coca Cola was already very big (by 1960 the company was claiming Coca Cola was being consumed 60 million times a day).

For almost 70 years since then, McDonald’s and Coca Cola have been growing together in a deep and lucrative partnership. As per a report in New York Times, McDonald’s often used Coca Cola’s offices as base for operations when it expanded globally.

For Coca Cola, McDonalds has been the most important customer for a long time and drives sales - so important that Coca Cola has a separate department called TMD (The McDonald’s Division).

For McDonalds, beverages from Coca Cola drives margins and completes the ‘meal’ offering for customers. Fountain soda has very high margins with almost no incremental labor costs. In fact, it was Coca Cola that seems to have suggested that McDonalds bundle soft drinks with Burgers for the ‘extra value meals’ concept.

Coca Cola seems to taste better at McDonald’s than anywhere else because the syrup is delivered in stainless steel tanks to McDonald’s rather than in the usual plastic bags.

They collaborate deeply on promotions like ‘$1 any size soda’ that was a big hit with customers since its introduction in 2010.

They also work together to address changing customer preferences and launch other Coke-owned products like Monster Beverages in 2015. When faced with a backlash for contributing to child obesity, McDonalds began bundling lower-calorie beverages like Honest Kids fruit juice that is owned by Coca Cola.

The McDonald’s-Coke partnership has been lucrative for both the companies in unlocking growth through new offerings and concepts.